(February 2002)

Can workers take control in Argentina? Chris Harman examines the evidence

Barricades on the streets of Buenos Aires

Before the Dictatorship

In 1969 there was a virtual uprising in Cordoba, the centre of the auto industry. This was followed by six years of increased working class militancy.

The ruling class regained the initiative, allowing those who exercised decisive influence over the trade union bureaucracy to participate in the structure of government.

The Peronist Party won the presidential elections – first under Campora (May-September 1973) under Peron himself (October 1973-June 1974) and then, after his death, under his second wife, Isabel (July 1974-1976).

Mass demonstrations dispose of two presidents in as many weeks. A star performer for the IMF-World Bank Washington consensus circus, Cavallo, is forced to flee the economics ministry. A leader of the largest political party warns of the danger of civil war. Such has been the picture in Argentina since the end of December. Yet much of the western media give the impression that these events are of marginal interest. They are happening a long way away, we are told, in a ‘developing country’ or an ‘emerging economy’, very different to western Europe, North America or Japan. In fact, what we are seeing in Argentina gives us a foretaste of what could happen elsewhere as increasing fluctuations in world markets wreak havoc in unexpected places.

Argentina is an industrial country, with a higher proportion of its workforce in industry than in Britain. It’s also a country where working people have, within living memory, experienced living standards close to west European levels. It was known as the ‘granary of the world’ at the beginning of the 20th century, with an economy very much like that of Australia, New Zealand or Canada, centred the massive production of foodstuffs on giant capitalist farms for the world market. Relatively high wages made it a magnet for millions of immigrants from Italy and Spain who brought traditions of industrial militancy with them.

Key sections of the ruling class were able, using state intervention and tight controls on imports, to siphon some of the agricultural profits into the building of new industries in the 1930s and 1940s, especially when war in Europe caused agricultural prices to double. The government of Juan Peron, an army colonel, was able to buy off worker militancy by doubling real wages at the same time as industrialising. His supporters gained control of the major unions and won an enormous working class following for an intensely nationalist ideology that preached unity between workers, the state and ‘patriotic’ capitalists. However, the boom in world food prices ended by 1950 and the military removed Peron from power in 1955.

From then on Argentinian capitalism confronted a central problem, which still plagues it today. It was small and weak and many of its industries were uncompetitive in world markets. Profitability came to depend on periodic onslaughts on workers’ living standards. But the working class retained its traditions of combativity and every spell of industrial expansion and inflation gave birth, eventually, to an upsurge of strike activity, which was only broken by throwing the economy into recession and crude methods of repression.

All out repression came in 1976 with the installation of a military dictatorship which murdered some 30,000 activists (six times the death toll in Chile). The dictatorship survived until its disastrous Malvinas/Falkland Islands war of 1982. It was successful in inflicting a massive defeat on the most militant sections of the working class. But it could not overcome the central problems of Argentinian capitalism – the lack of global competitiveness. Nor did it fully manage to stop all resistance from workers. The non-Peronist civilian government that followed was no more successful. Attempts to expand the economy led to hyperinflation (5000 percent in 1989), which could only be stopped by economic slump. Output in 1990 was lower than in 1977. It was against this sense of crisis that the Peronist Menem won the 1989 election and appointed the head of the national bank under the dictatorship, Cavallo, as economics minister. He was convinced that there was only one way to solve the crisis. The whole approach that had characterised Argentinian capitalist development since the 1930s had to be scrapped. The state had to step aside, allowing those industries that were uncompetitive to go bust. This ‘neoliberalism’, it was argued, would attract foreign investment and provide a future for Argentinian capitalists in a globalised economy. All the old nationalised industries were privatised. Welfare for the unemployed was removed to encourage ‘labour flexibility’. The local currency, the peso, was tied to the dollar.

For seven years the Argentinian economy grew at breakneck speed, and Cavallo became the darling of mainstream economists worldwide, advising governments such as those of Russia and Ecuador. Then the whole policy suddenly fell apart with the new phase of world economic crisis in Asia in 1998. Boom suddenly became bust. Commentators began to note, belatedly, that the boom had rested upon financing imports of luxury goods with debt and privatisation proceeds. In a declining economy the money was no longer around to service these debts. Each set of cuts led to further economic contraction and a further problem with debt servicing.

There were growing splits within the ruling class. One section – those living off bank interest and privatisation profits – wanted to replace the local currency with the US dollar. The other section – those running companies whose products were too highly priced for world markets – wanted to keep the peso and devalue it.

Driven below the poverty line

The only thing they agreed on was mounting attacks on the working class, and when these could not alone lead to a balancing of the books, on wide layers of the middle class as well. So there were attacks on the education system in the spring of last year – which were beaten back. This was followed by cuts in public sector wages and pensions by 15 percent in late summer, a refusal to provide funds to provincial governments to pay their employees, raiding pension funds to pay the interest on the foreign debt and finally freezing bank accounts. As unemployment soared nearly half the population were driven below the official poverty line. Workers were not getting paid, the middle classes found they could not get access to salaries paid through the banks, and shopkeepers could not sell their goods because people could not afford to buy them.

The result was growing discontent affecting a whole range of social groups. The union federations called six one-day general strikes in 18 months. There was mass agitation of students and teachers. People threatened to commit suicide in public unless they were given their jobs back. The unemployed organised pickets to block roads and bring the country close to a halt for days at a time. The poor began raiding supermarkets for food. Teachers occupied a bank because their salaries were not paid. By mid-December the mood seems to have been like that in Germany in 1923 or 1931 – of a whole country, in which every section of the population except for the very rich was being crucified by economic crisis.

Then on 19 and 20 December came that explosive fusion of bitterness that often marks the beginning of a revolutionary situation – the poor attacking the supermarkets to get food, the lower middle classes banging their saucepans, the small shopkeepers and stall holders expressing solidarity and working class youth with a thousand grievances out on the streets. Polls showed 30 percent of the population said they had taken part in protests, with 90 percent agreeing with them. The political elite in Argentina is now in shell shock. They have had to announce a cessation of payments on the foreign debt. They have had to make gestures to the movement that threatens to engulf them – courting the union bureaucracies, meeting the leaders of the pickets, talking to the Madres de la Plaza de Mayo (mothers of ‘the disappeared’), denouncing the ‘pillaging of the country’ by the privatisers, employing the language of 1940s Peronism and sending police to scrutinise the books of foreign banks. At the same time they are trying to assure the IMF and the owners of the privatised businesses that such gestures are not to be taken too seriously.

Two of the key elements in Lenin’s description of a revolutionary situation are present – the mass of people are not prepared to continue in the old way, and the ruling class itself cannot do so either. But there has not been a revolution. People are rejoicing that they have overthrown two governments. But the state – remains intact. So does the market system. And the overthrow of two lots of governments has not yet solved the problems faced by millions of people. That requires the emergence of a force that has the capacity to challenge the system in its entirety. And if the challenge does not come from the left, the danger is that the right will rise again.

A movement of popular assemblies has begun to take root in some localities. People are raising demands such as occupation and nationalisation of firms which have sacked the workers, the seizure of great refrigeration plants to provide food for hungry people, and the taking of control of the banks to stop the flow of money abroad. But there does not yet exist the third element in Lenin’s description, a powerful revolutionary party able to challenge the conservative and corrupt union bureaucracies and to fuse this movement of popular assemblies into a national alternative.

Argentina shows how in conditions of global crisis a so called ‘miracle economy’ can fall apart and create a near revolutionary situation. There is a message in that for activists everywhere.